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Monday, February 6, 2023
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Budget bomb

The people of Pakistan are going to be gifted with a mini budget, which could trigger a new wave of inflation as well as make an impact on the economic scenario in the country. It is being claimed by the opposition parties that the new finance bill in the form of mini budget was drafted at the behest of the International Monetary Fund (IMF) , which was tantamount to compromising the economic sovereignty of the country. In fact, the bill is aimed at meeting the IMF’s conditions for the clearance of Pakistan’s sixth review of the $6 billion Extended Fund Facility (EFF) by the financial institution. Mainly, the budget features amendments in income tax, sales tax and federal excise laws to impose Rs375 billion taxation measures leading to an increase in the prices of imported cell-phones, edible oil, automobiles and medicines. At present, the PTI government is facing a severe economic crunch due to the revenue shortfall to pay off ever-increasing loans. To cope with the situation, tough decisions have been taken that can invite public wrath after their approval in the form of a mini budget likely in next few days.

Almost every item has been taxed yet the finance ministry is telling the people that only luxury items would be brought under additional tax net. Although these measures would curtail import bill, yet these steps did not guarantee that the situation will turn around. Instead of widening the tax base, the government has resorted to indirect taxation measures which have resulted in an increased burden on salaried class. But the government has not been able to bring business class in the tax net.

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Although the progress of the economy hinges a lot on the increased exports and foreign direct investment in the country, an increase in the tax net is the utmost necessity to self-sustain the economy. The government of the PTI has to take drastic measures for enforcing a tax regime that could bring all those persons in the tax net who have been evading it through unfair means. The PTI needs to reform tax culture instead of using tradition methods of collecting revenue.

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